Wills are an extremely efficient way of passing on your estate, after death, to those who you loved and cared for in your lifetime. Gifts (as the law calls them) can be money, personal property, land or businesses. However, there are a number of traps for the unwary that might prevent your gifts from reaching the very people you intended to benefit. Here are some of the most common problems:
Beneficiaries Dying Before You – There’s always the possibility of someone who you wish to leave property to dying before you. If the gift was intended for your child who then predeceases you, it will automatically pass to their children in equal proportions. However, if you leave a gift to someone other than your child and they predecease you, the gift will fail. It will not pass to their children so you must nominate another person to receive the gift.
Divorce – Following a divorce (or the dissolution of a civil partnership), the law will automatically remove your former partner’s right to receive a gift from you (just in case you forget), unless there is explicit instructions in your will to prevent this from occurring
Ownership – To leave property in a will you must own it. That seems pretty simple, but wills can be written some time before a person’s death and their fortunes may change (so it’s important to review your will after a specified time).
Witnesses – If a witness who signs your will is also nominated to receive a gift, then the gift will fail (but the will itself remains valid).
Uncertainty – When the will is finally read, after your death, it’s sometimes not possible to accurately identify who the gift is intended for or what the gift actually is. The issue can be that an uncertain group of people have been identified as beneficiaries (e.g. a gift to ‘all of my friends’) or that a description of a person is vague (e.g. a gift to your ‘favourite son’, when you have five sons). There can be similar problems in differentiating property.
These are just a few of the reasons why gifts fail, resulting in them being returned to the bulk of your estate, to be shared out amongst the residuary beneficiaries who receive what’s left after taxes, debts and those all important gifts. The solution is to employ a competent professional to draft your will. They’ll spend a great deal of time: clarifying your wishes, helping you to identify and value your property, asking plenty of ‘what if’ questions, working to minimise your tax exposure – and, knowing the pitfalls above, they’ll make sure that gifts are placed directly into in the hands of the people who you care most about.